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American Activist Investors Get Ready To Invade Europe

Activist investors have been around for a long time, but in 2013 they shook up corporate America like never before, agitating for change at some of the nation’s most iconic companies, ranging from Apple to Microsoft and Pepsico. Armed with huge war chests and operating in a low-interest rate environment, the activist investors made good money by feasting on bigger and bigger corporate targets that generally had corporate balance sheets stuffed with cash.

But with most of the low-hanging fruit in America already picked and activist battles against larger companies proving tricky, American activists are starting to venture to foreign lands. In 2014, American activists will likely start to target Europe, says one person familiar with their plans. In October, billionaire hedge fund manager William Ackman, a prominent activist investor based in New York, went to Oxford University’s Said Business School and declared that activist campaigns against European companies are “going to happen.” In November, Gilberto Pozzi, head of European mergers & acquisitions at Goldman Sachs, reportedly said that “US activists are likely to target European opportunities in the short to medium term.”

The move by brash American investors into Europe will probably spark a culture clash given how uncommon activist campaigns are there, which is part of what makes the continent so attractive for American activists. The investment strategy, which often relies on public threats and pressure, has historically not worked well in Europe. In the U.S., activist investors were once called corporate raiders, but they have become more accepted over the years and some academic literature has recently even touted their virtues. Corporate boards in America are more willing than ever to work with activist investors and Time Magazine even put one of them on its cover, describing him as the most important investor in America.

But in Europe, which is still trying to recover from the euro crisis, activist investors are still generally viewed as extortion artists who only have short-term goals in mind. Chris Hohn, who runs the Children’s Investment Fund, is probably the most prominent activist investor in Europe, but there are not too many European investors like him.

Paul Singer, the billionaire American activist investor, has ventured to Europe over the years and even opened an office in London that has been headed by his son, Gordon. Singer’s Elliott Management hedge fund has recently waged some prominent campaigns against companies like Switzerland’s Actelion and British National Express. This year Elliott Management tried to stop Vodafone Group’s $10 billion deal for Germany’s Kabel Deutschland. This month Singer was trying to get San Francisco-based McKesson to pay more for Germany’s Celesio, in which Elliott has a big ownership stake.

Other high-profile American activists have recently gone to Canada, which has seen a big spike in activist battles. Ackman hit a home run by shaking things up at Canadian Pacific, while Carl Icahn bought a stake in Talisman Energy in October and secured two board seats. Barry Rosenstein, who runs hedge fund Jana Partners, had less success when he tried activist maneuvers at a Canadian fertilizer company. In 2013, activist hedge fund billionaire Dan Loeb went all the way to Japan, a country that is seen as hostile to shareholder activism, to try to force a big restructuring at Sony.

But the U.S. activist invasion of Europe might be a big story in 2014.

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